Suzlon Loss Widens as Cash Crunch Hits Turbine Sales

Suzlon Energy Ltd., India’s largest wind-turbine maker, said its loss widened in the fiscal third quarter as a shortage of cash hampered its ability to complete sales as the company negotiates with bondholders to pay its debt.

Pune-based Suzlon reported a loss of 11.56 billion rupees ($215 million) for the final three months of last year compared with an 810 million-rupee shortfall a year earlier. Four analysts surveyed by Bloomberg estimated a 6 billion-rupee loss.

“Abnormal operating environment hurt business,” Chief Financial Officer Kirti Vagadia said in a telephone interview. Suzlon focused on “liability management” during the quarter, leading to “liquidity constraints” that kept the company from executing orders, Vagadia said.

Last month, Suzlon finished refinancing $1.8 billion in debt following its default on $209 million of foreign-currency convertible notes on Oct. 11. The company’s failure to make payments on time was India’s biggest convertible bond payment failure and fanned concerns that creditors may demand immediate payment of other loans.

Loan and refinancing costs rose to 1.9 billion rupees from 764 million rupees in December. The turbine-maker’s program to revamp 95 billion rupee of debt allows a two-year moratorium on repayments, which will help the company focus on meeting its order backlog, Vagadia said.

Suzlon has orders worth 415.5 billion rupees, according to an e-mailed statement detailing the earnings. It has cut its interest rates by 3 percent and plans to use the funds to expand while cutting operating costs 20 percent by June.

‘Received Comfort’

“Suzlon has received comfort from lenders after restructuring of its debt, which should allow the company to recoup its resources and work on execution of orders,” said Shantanu Jaiswal, an analyst at Bloomberg New Energy Finance in New Delhi. “Suzlon continues to get orders from independent power producers and corporates. It has a good track record for execution. This should help the company rebuild finances.”

Vagadia said Suzlon is working on selling “non-critical” assets including China unit Suzlon Energy (Tianjin) Ltd., which it expects will raise $60 million. It also plans to sell component-making units across the world over the next two years, he said. Suzlon shares have dropped 14 percent the past year.

The company has appointed two to three advisers to help it sell assets though Vagadia didn’t name them. Bondholders have rejected Suzlon’s request for a four-month extension of payments. Vagadia said talks are continuing with investors.

“We’ve had no negative reactions from lenders so far,” Vagadia said. Suzlon is in “progressive and constructive” dialog with bondholders, he said.

(Corrects period in the first paragraph.)
Before it's here, it's on the Bloomberg Terminal.